The Gujarat Mineral Development Corporation (GMDC), the country’s largest lignite miner, will invest ₹670 crore in FY23. It looks to invest ₹200 crore towards setting up beneficiation plants, with the remaining being land acquisition costs (including compensation) for new and old mining projects.

The company, listed on the bourses, is also planning to bid for upcoming coal block auctions outside its home state. The RFD for nearly 109 coal blocks are on the cards, and GMDC is “actively interested” in some of these.

Lignite called brown coal, is a combustible, sedimentary rock formed from naturally compressed peat. It has a carbon content of around 25–35 per cent, and is considered the lowest rank of coal due to its relatively low heat content.

According to Roopwant Singh, Managing Director, GMDC, around ₹270 crore will be the land acquisition cost for new mining projects, while another ₹200 crore will be for existing or ongoing ones.

Fluorspar Beneficiation plant

The miner, he said, is also in the process of setting up a Fluorspar Beneficiation plant at Kadipani, (a JV with Gujarat Fluorochemicals and Navin Fluorine International ) having a capacity will be 40,000 tonnes per annum.

Two bauxite beneficiation plants are expected, too, with an investment between ₹15 crore and ₹45 crore.

Coal beneficiation plants are expected to come up in Bhavnagar and Kutch of Gujarat, each with an expected investment of ₹25–30 crore; and a “capacity of few lakh tonnes per annum”.

“Most of the investments are going to be from internal accruals. We remain debt free. Tenders for the beneficiation plants are already in the process. For instance for the Bhavnagar coal beneficiaition plant, the EoI is live, while for the Kutch one, it is expected to go live soon,” he told BusinessLine.

Increased demand for lignite

According to Singh, the idea behind the coal beneficiation plants is to ensure a better price for its lignite offerings, especially considering the mineral is expected to witness an increased demand in the coming days.

Investments would also be made to ensure increased production of lignite from its Bhavnagar mines. During 2021-22, lignite production at Bhavnagarwas 16.37 lakh tonne, an increase of 11.45 lakh tonne, as against 4.92 lakh tonne in FY21.

The GMDC was allotted lignite blocks in Panandhro Extension (Kutch), Bharkandam (Kutch), while four other blocks have been reserved for GMDC at Valia and Damkai Padal in Bharuch District, Ghala in Surat district and Lakhpat in Kutch.

“Dispatches for lignite are expected to go up in the coming quarters and there is increased demand. So if we go for beneficiation, it will lead to lesser clogging in furnaces. So we can easily command a better price at the auction. Better quality lignite also ensures higher customer retention,” he said.

“There is significant delta and we think we can retain the prices,” Singh added. Price review (for lignite) is done every 15 days.

Lignite sales account for nearly 85 per cent of the company’s revenues.

In FY22, revenues from operations stood at ₹2,732 crore, up 103 per cent y-o-y. The profit after tax was at ₹404 crore, against a loss of ₹37 crore in the year-ago period.

Future Proof

As part of its future proof strategy, GMDC is looking at bauxite sales and plans to dispose of the 1.1 million tonne stock.

New guidelines have been worked out and the tendering process is on.

“We realised that there were some difference in what we were offering and the market expectations. So we reworked the procedures. The tendering is on. And by May we should have some idea of realisations,” he said.